Local onion prices in Brazil have reached record levels after the poor growing season has shown that the domestic harvest has been disappointing. Prices have not been this high since 2015. Does this offer prospects for the Netherlands?
This article was updated on 6/8/2019.
The domestic market is currently in strong demand for Brazilian onions. Growers harvest their onions green, which are immediately eagerly bought up. Because the harvest turns out to be small after a disappointing growing season, prices skyrocket. At the beginning of August, they reached their highest level since July 2015. In the state of Goiás, the price for sorted and packaged onions of the best quality is €85 per 100 kilos (3,86 real per kilo). This means a price increase of 20% by the end of July.
Quality problems
Brazilian onions are mainly harvested and marketed fresh (green). Not only in the state of Goiás, but also in São Paulo. However, the precipitation means that the harvest cannot proceed smoothly everywhere. The growing season has not been ideal in the South American country. A lot of rainfall caused quality problems with our own cultivation. Due to the low prices last season, the area has also shrunk.
Neighboring country Argentina is an important supplier of onions. This country grows 18.000 to 22.000 hectares of onions. Much less than the estimated almost 60.000 hectares in Brazil. If Argentina has a shortage, the onions come from Brazil. Last year, Dutch onions were taxed with a 25% import tariff in Brazil. This is 2019% for 20 and 2020% in 15. Argentina does not have these rates.
Mercosur offers opportunities
The much maligned Mercosur deal ensures that European Union countries can export onions to Brazil more easily and without import taxes. Spain and the Netherlands are the largest European suppliers. However, in 2018, the European Union accounted for only 14% of total Brazilian onion imports. This role is expected to increase in the coming years.
Brazil is not yet included as a destination in the Dutch export list. Yet the country is already becoming better named as a buyer of large onions. Exports to Brazil are erratic. If the local market cannot support itself, the Netherlands is allowed to supply (with Spain as a major competitor). In 2015, this led to a top export of more than 107.000 tons. However, in 2018, exports were nil. The year before, almost 33.000 tons were exported.
Short-lived revival
The current upturn may be short-lived. Currently, a tight market is causing sky-high prices, but the harvest will start in September in the north of Brazil. The quality and yield seem good at the moment. From that moment on, the country will most likely be able to support itself again. However, the current demand can be an important buyer of Dutch onion sets. Especially because these are very coarse, which is precisely what Brazilian buyers ask for.